Canadian Manufacturing

National study highlights workers whose extra earnings get hit the most by tax system

Also more likely to lose out from extra earnings through working more hours or getting a higher-paying job were workers who live in Quebec, and those between the ages of 35 and 44.

March 14, 2022   The Canadian Press

A new study from the Finance Department suggests that single parents, lower-income households and recent immigrants are more likely to lose more for extra earnings than most other groups of workers.

Also more likely to lose out from extra earnings through working more hours or getting a higher-paying job were workers who live in Quebec, and those between the ages of 35 and 44.

In some instances, the federal analysis found that those groups of workers were more likely to see 50 per cent or more of their earnings offset by higher taxes, a clawback in benefits, or a combination of the two.

Women were more likely than men to lose out on 60 per cent or more of their extra earnings, which the recently released analysis chalks up to their slightly greater reliance on federal supports.

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Katherine Scott, a senior economist with the Canadian Centre for Policy Alternatives, says the study lends credence to calls from anti-poverty advocates and businesses for a broad review of the tax system.

She says a review is necessary because the tax system was designed in the past and doesn’t fully capture the economy as it is currently structured.